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American electric car maker Tesla Motors Inc. is teaming up with
Japanese electronics company Panasonic Corp. to build a battery
manufacturing plant in the U.S. expected to create 6,500 jobs.

The companies announced the deal Thursday, but they did not say where
in the U.S. the so-called “gigafactory,” or large-scale plant, will be
built. Tesla has said that Nevada, Arizona, Texas, New Mexico and
California are in the running.

Financial terms weren’t disclosed for the $5 billion plant.

The plant will produce cells, modules and packs for Tesla’s electric
vehicles and for the stationary energy storage market, employing 6,500
people by 2020.

Under the agreement, Tesla, based in Palo Alto, California, will
prepare, provide and manage the land and buildings, while Osaka-based
Panasonic will manufacture and supply the lithium-ion battery cells and
invest in equipment.

Tesla CEO Elon Musk has said the factory will help Tesla reduce its
battery costs by 30 percent. Tesla needs cheaper batteries in order to
produce its mass-market Model 3, an electric car it’s developing that
would cost around $30,000. Tesla hopes to have the Model 3 on the road
by 2017. The company’s only current vehicle, the Model S sedan, starts
at $70,000.

“The Gigafactory represents a fundamental change in the way
large-scale battery production can be realized,” said Tesla Chief
Technical Officer and co-founder JB Straubel, referring to the cost
reductions.

Sales of zero-emission electric vehicles account for less than 1
percent of the global auto market. But worries about global warming and
more stringent emissions regulations in many countries are expected to
boost sales of electric and other green vehicles.

Yoshihiko Yamada, executive vice president of Panasonic, said the planned factory will help the electric vehicle market grow.

Panasonic, which has ceded much of its strength in consumer
electronics to competitors, is putting more focus on businesses that
serve other industries, including batteries.

It remains powerful in Japan and some overseas markets in consumer
products such as refrigerators, washing machines and batteries for
gadgets.

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